Yen Rallies on Threat of Rising Oil Prices and Baltic Concerns

The overnight session was largely one of consolidation following the latest moves in many of the major currencies to fresh 2009 highs against the USD. Data overnight was mixed with UK PMI bettering expectations, Swiss CPI coming in weaker, and Eurozone PPI coming in as expected.

MORNING SLICES

Fundys – The overnight session was largely one of consolidation following the latest moves in many of the major currencies to fresh 2009 highs against the USD. Data overnight was mixed with [B]UK PMI[/B]bettering expectations, Swiss CPI coming in weaker, and Eurozone PPI coming in as expected. However, the Yen was an outperformer which weighed on the cross rates as global equities started to sell off on fears of economic uncertainty in the Baltic region, and concerns over the threat of rising oil prices to the global recovery prospects. The Eur/Chf cross also generated some attention after spiking some 40 points overnight after an SNB official declined to comment on Swiss currency moves. Kuwait’s oil minister said that a rise beyond $100/brl could fuel a global recession. Looking ahead, US personal spending (0.3% expected), personal income (-1.0% expected) and personal consumption (0.2% expected) are due at 12:30GMT, followed by pending home sales (0.7% expected) at 14:00GMT. US equity futures point to a lower open by more than 0.50% across all major indices, while commodities have also pulled back on similar drivers. The Yen is the strongest major currency against the USD on Tuesday, while Kiwi lags.

Quant –

Techs - EUR/USD in the process of consolidating after breaking to fresh 2009 highs on Monday to 1.4445. Next key resistance comes in by psychological barriers by 1.4500, while back below 1.4205 would ultimately be required to shift short-term outlook. In the interim, previous resistance by 1.4340 should support intraday. USD/JPY well offered on Tuesday with the market pulling back below 95.00 to take out the previous daily low and set up a potential bearish outside day. A lower top could now be in place by 95.90 ahead of the next drop below 91.75. Key levels to watch over the coming session come in by 95.45 and 94.00. GBP/USD continues to extend gains to fresh 2009 highs just over psychological barriers at 1.7000 on Tuesday ahead of the latest minor pullback. Daily studies are however starting to look stretched and the market could be on the verge of a major corrective decline. Initial support comes in by the previous 2009 high at 1.6745. USD/CHF has finally broken the key 2009 range base lows at 1.0590 to now open the door for a fresh drop towards 1.0370 over the coming days. Back above 1.0730 now required to take pressure off of the downside.

Flows – Macro and system funds selling Usd/Jpy; CTA stops cleared; French name on the bid. Russian account and specs on the bid in Cable. System related selling in Usd/Cad offset by real money buying.

Trade of the Day – No Trade: We already have enough exposure through our Short Gbp/Usd and Long Usd/Cad and will stand aside for now to see how things play out.

P&L Update and Overview: Many of you have been asking for a way to better track trading results and open positions. In response to these requests and in an effort to be fully transparent, a simulated portfolio was been created in June to track and mirror all recommendations and trades. Below is a return on equity curve since inception on June 1, 2009, along with an open and closed position tracker. I am hopeful that this will make things easier for you all.

Additionally, please feel free to check out a [B]full profit and loss statement since inception on June 1, 2009[/B].

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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Quant section prepared by David Rodriguez, Quantitative Strategist for DailyFX.com
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Joel Kruger publishes 6 daily pieces:

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“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
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“Indicator of the Day”A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
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“Midday Snapshot” – A Midday Fundamental Update, along with Technical Analysis of Selected Rates.
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